When the workers at a garment-assembly factory (known as a maquila) in El Salvador started a union drive, their goal was simply to improve their working conditions and earn a living wage; they never imagined that they would be running the place. But when the owners responded by trying to shutter the factory and move production to another country, the workers had no other choice if they hoped to keep their jobs. Now, as they help write a new chapter in the history of low-wage workers in the global South, they must also deal with the more pressing concern of turning a profit as the global apparel industry undergoes a wrenching transformation.

The remarkable story of the factory that is now aptly named Just Garments began in early 2002. Soon after workers joined the Textile and Industrial Union, known in Spanish as STIT, and asked the managers of the Taiwanese-run Tianan maquila to negotiate a contract that would provide higher wages and safer working conditions, the bosses shut the factory doors and put the organizers on an industry-wide blacklist. As has happened after every other successful union drive in Central American maquilas, the owners announced plans to move production to another country with a more docile labor force. Led by veteran union leader Gilberto Garcia, the two-dozen strikers knew they were in for a long struggle: striking workers at other factories in El Salvador had been subjected to beatings, arbitrary arrests, and death threats.

But the Salvadoran workers joined with student and labor activists in both the United States and Taiwan, and initiated a consumer campaign against the company's American buyers--big-name retailers like Kohl's, Target, and Gap. In the face of this pressure, Tainan relented, and in November 2002 signed an agreement to reopen the factory under worker control, overseen by a two-member board of directors, one from the company and the other from the union. As part of the deal, Tainan agreed to provide machinery and technical support as well as startup capital. The factory was legally established under the new name "Just Garments" in April 2003.

It turned out that the real battle had only begun. Government officials put up roadblocks at every turn, releasing the machinery and allowing the factory a spot in the export free trade zone only after another pressure campaign. The workers spent the better part of a year fixing up their dilapidated factory and getting ready for business. They survived by doing pick-up work when they could find it, and by getting donations from international supporters.

When Just Garments finally began filling clothing orders in April 2004, it was managed by a two-member board of directors: the union leader Garcia, and a representative from Tianan. "The company put in $160,000 in cash and $240,000 in machinery. This meant that they had a 99% stake in the factory and the workers only 1%," explains Garcia. In the past year the union has increased their stake to 55% thanks to loans and donations from unions in the United States and Canada, as well as cash, machinery, and material from clothing giants Land's End and Gap. But even with this support, Just Garments is still struggling to build up its production capacity so it can handle major orders. "Right now we can only work as subcontractors for other factories," says Garcia. "We have customers asking for huge orders of T-shirts--one rock band wants 70,000!--but we don't have the capital to buy the cloth."

In the apparel business, as in other industries that export products made in poor countries to be consumed in wealthy ones, only a tiny amount of the consumer dollar ends up in the hands of the producers. As Garcia explains it, "The big brands pay about 20 cents to make a T-shirt that they sell for $15 just by putting their label on it and maybe adding a few cents of value. With that 20 cents, the factory pays for electricity, rent, and labor. With these prices the owners are practically forced to exploit their workers if they want to make a profit."

Just Garments' plan for getting out of this trap is to start producing under their own label rather than only working as subcontractors. "We've figured out that if we can develop the means to distribute on a larger scale we could sell a T-shirt for two dollars instead of 20 cents. Of course we'd have to invest about 80 cents of that in material, but with that extra dollar or so we could keep the factory going and pay decent salaries to the workers. We'd also like to start using organic cloth. But the first step is to get a source of financing so that we can buy the materials for the big orders."

Until they are able to make apparel under their own brand, Just Garments is only paying its workers 5% over the minimum wage--not a bad deal, since many employers don't even honor the legal minimum, but well short of the 150% increase that the union considers a living wage. But the change in management has brought other tangible improvements that mark a sharp contrast to standard industry practices. Sick days and legal holidays are honored without question. Social Security payments are paid up. No one is forced to work overtime. All work stations have ergonomic chairs. And new ventilation has been installed to control the airborne fabric dust. "You can't imagine how much dust is generated to make each shirt," says Garcia. "Sadly, few factory owners are willing to spend the money to keep the dust out of the air and the workers' lungs. For us, the safety and health of the workers has been our top priority." But beyond the material benefits, the most important has been "the feeling of mutual respect and cooperation."

A new threat is on the horizon. January 1 of this year saw the end of the Multifiber Agreement, a textile trade arrangement that for decades has allowed many poor countries, including El Salvador, to export a set volume of textiles and apparel. (See "Falling Off a Cliff," page 8.) Now many of the major brands are buying from China, where wages are low and the only unions are tightly controlled by the Communist Party. Although the Bush administration sold the Central American Free Trade Agreement (CAFTA) to the region's leaders in part by suggesting that it would help the maquila sector, it's far from clear that it will help factory workers. "CAFTA's worker rights provisions, such as they are, represent a giant step back from worker rights provisions that existed prior to the passage of CAFTA," says Stephen Coats, director of the Chicago-based U.S. Labor in the Americas Project, or US/LEAP. "CAFTA standards are lower (compliance with national law rather than international standards) and the sanctions are weaker (potential fines are paid to the government instead of trade sanctions)."

While Just Garments can't compete with China on wages, Garcia thinks they'll survive by marketing to the growing niche of ethical consumers, and hope that by getting the word out that niche can turn into the mainstream. "Just think of all the T-shirts and sweatshirts that are sold in universities," beams Garcia. "Now imagine if all the uniforms of firefighters, police, hospitals, and city workers had to be sweat-free. We're just scratching the surface. Remember, it took 20 years for the fair trade coffee movement to grow to where it is now. We're just getting started."

Coats agrees. "Just Garments has chosen a future that seeks to sidestep the race to the bottom in the post-MFA world. But its future depends on the development of the sweat-free market." Stay tuned.

Jay Blair is a former intern at Dollars & Sense. Daniel Fireside is books editor at Dollars & Sense.